Hotel Construction Activity Highest Since Early 2023

(Illustration courtesy of CoStar Group; Breakout image courtesy of Pixabay/pexels.com)

CoStar Group, Washington, D.C., reported the volume of U.S. hotel rooms under construction recently reached its highest since February 2023.

According to CoStar’s June data, there were 157,713 hotel rooms in the in-construction stage in June, up 5.5% from June 2023.   

There are 333,827 rooms in the planning stage, a 38.7% jump from a year ago, and just under 267,000 rooms are in final planning, up nearly 10%.

“The number of rooms in construction has grown year over year for four consecutive months,” STR Vice President of Analytics Isaac Collazo said. “While upscale and upper-midscale continue to dominate, accounting for about 50% of all rooms in the final phase of the pipeline, the pace of activity in these segments has slowed compared to last year.”

Collazo noted the midscale and economy segments have shown the most growth, up 42% and 34%, respectively, “with newer brands and extended-stay accounting for most of the new construction across the midscale segment.”

Chain Scale Segments per CoStar (% of existing supply, in-construction room count):

1.    Luxury (4.5%, 6,760 rooms)

2.    Upper-Upscale (2.7%, 19,023 rooms)

3.    Upscale (4.0%, 36,806 rooms)

4.    Upper-Midscale (3.5%, 40,954 rooms)

5.    Midscale (2.9%, 14,900 rooms)

6.    Economy (1.3%, 8,384 rooms)